Real Estate Tax Policy Advocating on Capitol Hill
April 16, 2025 • In late March, I joined ICSC and retail real estate colleagues from across the country to lobby on Capitol Hill for tax policies that will support our industry.
From left to right: Kyle R. Christiansen [Partner Bogdan and Lasky LLC], Justin K. Rodgers [President & CEO, Greater Jamaica Development Corporation], Congressman Gregory W. Meeks [D-NY05], Ellen Sinreich [Principal, The Sinreich Group], Lamont R. Bailey [Chairman, Greater Jamaica Development Corporation]
Day 1: Getting Up To Speed: Real Estate & the Feds
On day one, we gathered in Washington D.C. for a day of internal ICSC meetings that began with a meeting of the Legal Advisory Council (of which I am the Vice Chair). Betsy Laird, ICSC’s EVP of Government & Public Policy, briefed us on Congress, and its focus on the upcoming budget reconciliation bill that will set forth the federal budget for Fiscal Year 2025, and will likely extend the tax cuts in the 2017 Tax Cuts and Jobs Act (2017 Tax Act). As a member of ICSC’s national Environmental Committee, I also participated in a meeting focused on issues ranging from the regulation of the Waters of the U.S. and PFAS (forever) chemicals to brownfield cleanups.
Day 2: Briefings: Tax Issues & Political Strategy
On day two, we were briefed on the tax issues we would be speaking about on Capitol Hill the next day. Given the almost singular focus in Congress on the reconciliation bill, our advocacy on the Hill was going to be laser-focused on protecting our industry from changes to tax policy that would have a negative impact on the solvency of our industry. At lunch, Kevin Brady, the Former Chair of the House Ways and Means Committee (during the 2017 Tax Act deliberations) shared his point of view about how to advocate most effectively for tax policies that will support the real estate industry.
Day 3: On the Hill: Advocating for Our Industry
On day three, I felt chills of excitement (really, I did!) as we circled the long, meticulously maintained hallways of the Rayburn, Cannon, Longworth, and Capitol office buildings. Our New York delegation met with Congressman Gregory Meeks [D-NY05, Jamaica and surrounding communities in Queens] (pictured above) and Congresswoman Grace Meng [D-NY06, Flushing, Kew Gardens and surrounding communities in Queens]; and staff members for Congresswoman Nicole Malliotakis [R-NY11, Staten Island and Southern Brooklyn], Congressman Jerrold Nadler [D-NY12, the Upper East and West Sides and Midtown Manhattan], Congressman Joseph Morelle [D-NY25, Rochester and surrounding communities], and Senator Chuck Schumer.
The tax policies we advocated for included the following:
Carried Interest
We advocated against increasing the lower long-term capital gains tax rate on carried interest (which refers to a portion of the proceeds developers receive in exchange for the risks they take) or any other limitations on this tax treatment. 53% of ICSC members report that more than half of their projects would not have happened without the capital gains treatment on carried interest proceeds.
C-SALT
Some policymakers have suggested ending the ability of businesses to deduct State and Local Taxes (SALT). We advocated against capping or eliminating the business SALT deduction. Property taxes are the single largest operating expense for U.S. commercial real estate businesses, making up almost 40% of total expenses. Capping or eliminating this deduction would likely lead to insolvency or foreclosure of many properties and discourage investment in our industry.
Pass-Through Deduction
We advocated for permanently extending the 20% pass-through deduction, which was included in the 2017 Tax Act on a temporary basis. The deduction creates tax rate parity between C corporations, whose top rate was permanently reduced to 21%, and other businesses, including partnerships, REITs, and S corporations, whose top rate remained at 37%. Most real estate owners are not C corporations and thus eliminating the deduction would negatively impact our industry.
Looking Ahead
While it’s impossible to know if our advocacy efforts will be effective in shaping the reconciliation bill that Congress ultimately enacts, doing nothing was not an option for those of us who showed up in D.C. to lobby on Capitol Hill.
Is your legal leasing process an effective tool for maximizing value creation in today’s “new” normal business environment?
Call us to make sure. Doing nothing is not an option.